Demand Letters

Should you send a demand letter to your judgment
debtor, after obtaining your assignment of judgment; as
a first tactic to attempt to settle or recover your
judgment?

One of many judgment-related articles: I am a judgment broker,
not a
lawyer, and this article is my opinion based on my
experience in California, please consult with a lawyer
if you need legal advice.

Or, would it be it better to go after available debtor assets
with garnishments or levies right away, without any
notice to your judgment debtor? Even when you hope for
some quick settlement offers; most often, sending out
demand letters get no responses (either positive or
negative) from judgment debtors.

It is usually more effective to send demand letters
out, after you have already found an available judgment
debtor asset. While you could send a demand letter
immediately after getting any assignment of judgment;
such letters are usually more effective when you have a
"slam-dunk" judgment situation, and you know there is
no "wiggle room" for the judgment debtor.

Always include a copy of the judgment itself, the first
time you mail something to your judgment debtor.
You may offer some sort of a settlement or compromise
agreement,
and if they do not take advantage of it; you may look
good later in court,
presuming you do not want to budge on the entire
balance owed. Other reasons to send demand
letters include verifying the debtor's current address;
and some courts take months to process assignments of
judgments.

A potential problem with sending a settlement agreement
that includes a compromise,
is that you may create a possible novation problem. A
novation is a new obligation
that replaces the old one as soon as you sign it. If
you offer to settle in writing,
for less than the full amount owed, that new settlement
agreement might become the
actual new amount owed. The other potential problem is
if one forgets to include a
"Mini-Miranda" statement in their letter, pointing out
that they are a debt collector.
Generally, the debtor has 30 days to respond.

Even if you do not send a settlement offer, it is a
good idea to send a copy of the
court-endorsed notice of the assignment to you, to the
debtor; to avoid the risk of a direct payment to the
OJC (Original Judgment Creditor). That way, if you send
notice that you own the judgment, and the debtor then
pays or settles with the OJC, you now have grounds for
a lawsuit against each of them, if they try to cut you
out.

Most settlement letters do not work because the debtors
did not respond to their debt,
their creditors, or the judgment itself. Judgment
recovery is not an easy business, and if
just sending out demand letters often resulted in
payments, there would a lot more people
working in this business. Judgment recovery takes hard
work, and also being smart enough to carefully select
the judgments you take assignment of.

It works better to look for available judgment debtor
assets, attach or levy against them; then send out a
settlement letter.
Intimidation is a powerful method of collection so if
you find an available asset, either lien it or levy it.
Then, inform the judgment debtor that you are in
charge; and that you can (presuming you can follow
through and will)
proceed with the levy. Demand letters make more sense
when you have a wage levy planned; they make little
sense if
they tip off your debtor of your plan for a future
bank levy.

Sending demand letters can backfire. There was a case
where a VP of a California hotel
chain pleaded with a judgment enforcer to drop the wage
garnishment because it would be to embarrassing.
The debtor promised to pay in installments. They did
not follow through, and then they moved to a state
where wage garnishments are not allowed. Occasionally,
demand letters do work, so try sending one out.